Financial Sector Competition and Knowledge Economy: Evidence from SSA and MENA Countries
Journal of the Knowledge Economy, 6(4), pp. 717-748 (2015)
37 Pages Posted: 10 Sep 2014 Last revised: 7 Dec 2015
Date Written: August 8, 2012
The goal of this paper is to assess how financial sector competition plays-out in the development of knowledge economy (KE). It contributes at the same time to the macroeconomic literature on measuring financial development and response to the growing field of KE by means of informal sector promotion, micro finance and mobile banking. It suggests a practicable way to disentangle the effects of various financial sectors on different components of KE. The variables identified under the World Bank’s four knowledge economy index (KEI) are employed. Three hypotheses based on seven propositions are tested. Results show: (1) the informal financial sector, a previously missing component in the definition of the financial system by the IMF significantly affects KE dimensions; (2) disentangling different components of the existing measurement of the financial system improves dynamics in the KE-finance nexus and; (3) introduction of measures of sector importance provides relevant new insights into how financial sector competition affects KE.
Keywords: Financial development; Knowledge Economy
JEL Classification: G21; O10; O34; P00; P48
Suggested Citation: Suggested Citation